Gold heads south after volatility settles post FOMC neutral statement
- As widely expected, the FOMC opted to leave the Fed funds rate in the range of 1.00% to 1.25%.
- Odds of a Fed hike at 82 vs 81 pre-announcement.
- The 10-year yield is down about 2.5 basis points.
- Gold initially went bid on the FOMC statement from $1,274.75 to $1,279.10 the high before selling off making a fresh low for the session of $1,273.63 and bid back up to $1,275.91 where the price steadied 20 minutes after the event.
The FOMC statement came in as expected. Policy remains accommodative. The Economy will warrant gradual rate increases. The balance sheet will continue to run off. Economic activity has risen at a solid pace despite the hurricane headwinds.
Fed meeting: Interest rates unchanged at November meeting
Main headlines from the Fed statement:
- Economic activity rising at "solid rate" despite storms
- Labor market continues to strengthen
- Inflation remains soft even though gasoline price rises after hurricanes boosted inflation
- Measures of longer-term inflation expectations little changed
- Balance sheet taper continuing
- Household spending has been expanding at a moderate rate
- Growth in business fixed investment has picked up in recent quarters
- Fed meeting: Interest rates unchanged at November meeting
Gold levels
Gold is carving out fresh lows in a bearish grind on the second attempt of a challenge to 31st Oct uptrend from circa 1270. 1272.19 is the first target and where bears failed in London. All in all, the price is deeper below the 200-hourly SMA with and bears eye 1256-55 as an intermediate support ahead of the 1250 level. On the flipside, the 1280 zone is an immediate resistance, ahead of the 21-day SMA at 1281 region. The triple daily top at 1284.00 does not bode well for the price either while RSI is biased to the downside on the daily sticks.